> Posted by Sonja Kelly
My bank does not maintain a branch in my state. Actually, according to my bank’s website, the nearest branch to my home is over 100 miles away.
The problem for me is actually not a lack of bank branches near my home. The problem is my own inertia. Somewhere between my August 2010 move to Washington, DC and the present, I lost the will to find a new bank and transfer my funds.
So I have to be creative. When I know I need cash, I have to go to my grocery store so that I can get cash back after using my debit card. I know I could use another bank’s ATM, but I justify the grocery store trip by telling myself that the $3 fee per transaction could be better spent on a couple pounds of fruit. Large checks, unfortunately, must be sent to a central “bank by mail” address whose name sounds laughably similar to “Pony Express” days.
While these are small annoyances, I have also become more dependent on the more convenient and innovative ways that my bank serves me from a distance:
- Online banking: Checking my balance, paying my bills, and managing my accounts can all be done through the Internet.
- Cell phone banking: Thanks to an app on my phone, I can take photos of checks of smaller amounts, and they are automatically deposited into my account. I can also transfer funds across connected accounts through my phone, although the person-to-person payment system has not yet been developed.
- Switching systems: My bank communicates with other banks and non-bank financial intermediaries so if I really am in a bind, I can get cash at any ATM, anytime, for a nominal fee.
On a micro-level, these innovations have significantly decreased the bank’s cost of working with me. I probably talk with a live bank representative once per year (when I visit my parents in Chicago). Doing much of my banking online, the bank uses fewer employee hours to process my claim (instead of manually entering information from deposit slips and reading handwritten checks, for example).
As we think about the possibility of full financial inclusion, these sorts of innovations are necessary, both to bring down cost and to increase access. My situation is, of course, one I have chosen. But for those who are without financial access by no fault of their own, cell phones, switching systems, point-of-sale devices, and even online banking in some places could mean the difference between financial security and insecurity.
Make no mistake, my financial life would be less complicated if I had a bank branch nearby. Furthermore, on a macro level, I am not predicting that we are moving toward a cashless world, as CGAP cautions against. I am also not asserting that the majority of branchless banking customers were previously unbanked, as William Jack and Tavneet Suri’s publication debunks after a survey of M-PESA’s customer base. What I do think is exciting, though, are the innovations that are emerging in the branchless banking world. GSMA reports that there are now 124 live deployments of mobile money platforms, with almost 100 more in the works. Visa and MasterCard have recognized the importance of branchless banking and are actively nurturing bilateral partnership and joint ventures. While branchless banking efforts may not directly target those who are financially excluded, it will no doubt benefit them. And importantly, it should have an effect on how we think about and cultivate financial inclusion.
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Image credit: weaselzippers.com
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